Today we’re going to get a quick overview into “How can I figure out if I qualify for a mortgage?” A lot of you out there might not be sure what it is that we, mortgage coordinators, are looking for when we ask all these questions on your mortgage application; how much money you make, all of your past credit, credit cards, and all that stuff. These questions seem very invasive, but I’ll let you know what it is that lenders and banks are looking for when they’re asking you all these questions.
The three parts of qualifying for a mortgage are:
1. Your income:
Obviously you’re arranging a mortgage and you’re promising to repay a bank or lender, for example, the next five years. We want to look at not only how much money you make, but also your employment history, employment stability, and status. We want to know how reasonable it is to assume you will be able to make this amount of money for the next five years to pay off your mortgage.
So obviously as money comes in, money goes out and at this point in your life you may have incurred some debts, like student loans, credit card debts, and even car loans and all the money that’s coming in is just going right back out to pay for those previous debts. This would indicate you don’t have much left over in order to arrange a mortgage and pay that as well.
3. Your credit:
This is sort of related to your debt, but not really. Credit is a history of your previous debts recorded in one easy to read place, now they look at how well you have been paying your previous debts, things like student loans, credit card, car loans, if you’ve ever missed any payments, if you’ve ever filed any bankruptcy or collections. What they do is they calculate all of those and assign a number, which ends up being your credit score. The higher the number the better, which essentially means when our banks and lenders look at your application, if it’s a nice high number, they are quite willing to lend you money because based on your past history, it is quite likely you will be able to repay this mortgage in the future.
Now obviously there’s some other issues like your downpayment, you do have to satisfy some downpayment requirements and once you are pre-qualified and you find yourself a property the property itself will also need to be looked at. The lender won’t lend you money if the house is going to fall over and be worth nothing in the next few years. If you have any questions please feel free to contact us and stay tuned for Part II of this topic coming soon!